Democrats Propose Swapping Tax Cuts for Infrastructure

Senate Democrats March 7 unveiled a plan to pump $1 trillion into roads, bridges and other non-transportation infrastructure by throwing two-thirds of the Republican tax overhaul into reverse.

Senate Minority Leader Charles E. Schumer (D-N.Y.) suggested the American people and most Republicans now realize that President Donald Trump’s infrastructure plan is “a nonstarter” because it relies too heavily on investment by state and local governments and the private sector, and does not include a revenue source for the proposed $200 billion federal share.

The Democrats’ plan would provide $140 billion in additional investment for road and bridge improvements as well as a separate $140 billion to preserve the solvency of the Highway Trust Fund. It would also include $115 billion for water and sewer infrastructure, $115 billion for public transportation, $50 billion to improve rail infrastructure, $40 billion to improve airports, $50 billion to rebuild schools and $40 billion to build high-speed Internet connections in rural areas.

To pay for the plan, Senate Democrats propose: restoring the 39.6 percent top income tax bracket; reinstating the alternative minimum tax; raising the top corporate tax rate from 21 percent to 25 percent and eliminating cuts to the estate tax.

Senate Majority Leader Mitch McConnell (R-Ky.) said the real “nonstarter” is any suggestion that Americas want to give back the bonuses, pay raises, new jobs and booming stock market that have resulted from the tax overhaul signed into law late last year by Trump.

The Democrats’ plan is an update of their January 2017 “Blueprint to Rebuild America’s Infrastructure.” It arrived a day after U.S. Department of Transportation Secretary Elaine Chao defended Trump’s plan before the House Transportation and Infrastructure Committee. She said the administration is considering all revenue sources, including an increase in the federal gas tax, but has not put forward any preferred pay-fors.

While the document is clearly intended to differentiate the parties ahead of the 2018 mid-term elections, it is unclear if the release of this proposal will preclude Democrats from working with Republicans on an infrastructure bill that is unrelated to the GOP tax plan.